Business and brand strategies to build customer loyalty

Customer loyalty refers to the ongoing willingness of a customer to engage with a business – buying their products, using their services, choosing them over competitors – over a sustained period. It represents a long-term commitment to a brand, usually resulting from multiple positive interactions between the customer and a company.

What keeps customers returning to brands and businesses? What are the advantages of achieving brand loyalty? Are there effective strategies and incentives that help win and retain loyal customers?

Why is building customer loyalty important?

Customer loyalty is built on the foundations of strong, positive experiences and customer relationships – and the importance of both new and existing customer spending power and preference should not be underestimated. Today, brands and businesses must fulfil the high-quality, speedy, seamless, and immersive experiences that customers have come to expect.

There are several business benefits to having an established, engaged, and loyal customer base:

• Repeat purchases and higher average spends – of course, the most obvious advantage to repeat customers is repeat sales and revenue. Increased customer lifetime value (CLV) – how much a business can earn from a customer over the course of their relationship – is a critical advantage, and data shared by HubSpot indicates existing customers spend 31% more on average than new customers.
• Happy customers bring in more business – whether through recommendations, referrals, and word-of-mouth marketing, or as brand ambassadors and advocates (such as sharing on social media platforms or posting positive reviews), customers who rate your brand will likely spread the word.
• Increases brand credibility and trust – customers are far more likely to trust brands who deliver a great customer experience and who have met and understood their needs, leading to enhancing brand awareness and image.
• Saved resources – the effort associated with retaining existing customers equates to significantly less than the effort of acquiring new customers (which can be between 5 and 25 times more expensive).
• Less strain on customer service and support teams – higher overall customer satisfaction means that issues and complaints are less common, and pressure on support and remedial services is reduced.

All of this serves to increase competitive advantage, profitability, and long-term business success – which are valuable to businesses and brands operating in all industries. According to Gartner, if customers receive what they deem as ‘value’ during an interaction, there is an 82% probability of repurchase or renewal when presented with the chance to switch brands.

What strategies can we adopt to build customer loyalty?

If you want the perks of customer loyalty – such as repeat business, new customer acquisition, and competitive advantage – you’ll need to invest time and energy in building it among your audience.

As a starting point, it’s important to explore loyalty in a brand context. Customers return to certain brands time and time again because they associate them with positive experiences. These experiences could be related to excellent customer service, consistently high-quality products, trustworthiness, an emotional connection to brand identity or values, alongside other factors.

There are numerous ways that business leaders and marketing experts can cultivate customer loyalty and boost existing retention strategies, including:

• communicating values via brand storytelling
• prioritising corporate social responsibility (CSR) efforts that resonate with customers
• leading community-building initiatives
• offering exceptional customer service and personalised experiences
• implementing reward schemes and loyalty programmes
• collecting customer feedback and striving for continuous improvement
• investing in meaningful partnerships and collaborations
• outperforming competitors in terms of value to customers.

The role of customer relationship management systems in building loyalty

For many brands, customer relationship management (CRM) systems are integral to their marketing strategy, helping to boost both customer loyalty and customer retention. They achieve this by enabling businesses to forge stronger connections with their target audiences.

One of the biggest benefits of using CRM software is the ability to personalise a customer’s experience. As customer data and interactions are all carefully logged and analysed, brands can dig into specific customer needs, preferences, behaviours, and pain points. These insights enable marketers to design deeply personal and optimised experiences that resonate with their customers.

All this data means brands can proactively plan highly relevant, timely communications. For example, Amazon can use its retailer customer data to examine a customer’s purchase history, browsing history, and past interactions, using this broad, holistic view to engage with them when they’re most likely to be receptive.

CRM systems support sophisticated audience segmentation, enabling brands to divide their customer base along demographic lines such as age, gender, interests and preferences, and behaviour. These insights support highly targeted marketing and allow businesses to develop irresistible loyalty and rewards programmes that truly resonate with customers.

How to design and launch a customer loyalty programme

Deloitte’s Evolving trends in brand loyalty and customer behaviour: 2023 edition report states that brands should drove drive loyalty programme demand and engagement by:

• enhancing trust in data capture while continuing to provide personalised experiences
•  keeping loyalty programmes simple, with easy ways to earn and redeem rewards
• designing paid programmes to help drive additional spend and customer engagement
• offering premium rewards and enhanced customer service.

Any reward programme you design needs to keep customer needs at its very core. You’ll need to:

1. Study your current customers and ask key questions. For example: What type of products do they buy? What’s their average annual spend? What features of our brand most appeal to them? How fast do they pay? Does an omnichannel relationship exist? Alongside this, analyse how satisfied they currently are via feedback questionnaires and comments.
2. Define two budgets – one for customer retention and one for new customer engagement – and decide which customer segments to target for each. Take into account factors such as purchase volume, purchasing ability, payment speed, customer profitability, and loyalty over time.
3. Next, you’ll need to select the tactics you’re going to use – and remember, they need to be meaningful – and preferably, personalised – for the individual customer. These might include initiatives such as ‘punch cards’, discounts as part of a referral programme, early access to new products, offers or ‘hidden’ content, invitations to exclusive in-store or other events, competition entries, reductions in pricing when hitting a certain ‘threshold’, and premium service features.
4. Continue to monitor engagement with the programme and adapt as necessary.

There are countless examples of brands who have successfully implemented rewards programmes to boost customer loyalty. Starbucks’ Reward Programme enables customers to accrue loyalty points (‘stars’) via the app which can then be redeemed for free drinks, food, and merchandise. North Face’s highly personalised loyalty scheme enables customers to collect points and exchange them for trialling new products before they’re released and accessing outdoor travelling experiences. The Body Shop understands how to connect with its eco-conscious customers, enabling them to donate rewards from purchases to selected charities and initiatives.

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